Income statement data for Winthrop Company for two recent years ended December 31 are as follows: Current Year Previous Year Sales $2,280,000 $2,000,000 Cost of merchandise sold 1,960,000 1,750,000 Gross profit $320,000 $250,000 Selling expenses $156,500 $125,000 Administrative expenses 122,000 100,000 Total operating expenses $278,500 $225,000 Income before income tax expense $41,500 $25,000 Income tax expenses 16,600 10,000 Net income $24,900 $15,000 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop CompanyComparative Income StatementFor the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount Increase (Decrease) Percent Sales $2,280,000 $2,000,000 $fill in the blank 292facfcbfc4faf_1 fill in the blank 292facfcbfc4faf_2% Cost of merchandise sold 1,960,000 1,750,000 fill in the blank 292facfcbfc4faf_3 fill in the blank 292facfcbfc4faf_4% Gross profit $320,000 $250,000 $fill in the blank 292facfcbfc4faf_5 fill in the blank 292facfcbfc4faf_6% Selling expenses $156,500 $125,000 $fill in the blank 292facfcbfc4faf_7 fill in the blank 292facfcbfc4faf_8% Administrative expenses 122,000 100,000 fill in the blank 292facfcbfc4faf_9 fill in the blank 292facfcbfc4faf_10% Total operating expenses $278,500 $225,000 $fill in the blank 292facfcbfc4faf_11 fill in the blank 292facfcbfc4faf_12% Income before income tax expense 41,500 25,000 fill in the blank 292facfcbfc4faf_13 fill in the blank 292facfcbfc4faf_14% Income tax expense 16,600 10,000 fill in the blank 292facfcbfc4faf_15 fill in the blank 292facfcbfc4faf_16% Net income $24,900 $15,000 $fill in the blank 292facfcbfc4faf_17 fill in the blank 292facfcbfc4faf_18% b. The net income for Winthrop Company increased between years. This increase was the combined result of an in sales and percentage in cost of merchandise sold. The cost of merchandise sold increased at a rate than the increase in sales, thus causing the percentage increase in gross profit to be than the percentage increase in sales.

Income statement data for Winthrop Company for two recent years ended December 31 are as follows: Current Year Previous Year Sales $2,280,000 $2,000,000 Cost of merchandise sold 1,960,000 1,750,000 Gross profit $320,000 $250,000 Selling expenses $156,500 $125,000 Administrative expenses 122,000 100,000 Total operating expenses $278,500 $225,000 Income before income tax expense $41,500 $25,000 Income tax expenses 16,600 10,000 Net income $24,900 $15,000 a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place. Winthrop CompanyComparative Income StatementFor the Years Ended December 31 Current year Amount Previous year Amount Increase (Decrease) Amount Increase (Decrease) Percent Sales $2,280,000 $2,000,000 $fill in the blank 292facfcbfc4faf_1 fill in the blank 292facfcbfc4faf_2% Cost of merchandise sold 1,960,000 1,750,000 fill in the blank 292facfcbfc4faf_3 fill in the blank 292facfcbfc4faf_4% Gross profit $320,000 $250,000 $fill in the blank 292facfcbfc4faf_5 fill in the blank 292facfcbfc4faf_6% Selling expenses $156,500 $125,000 $fill in the blank 292facfcbfc4faf_7 fill in the blank 292facfcbfc4faf_8% Administrative expenses 122,000 100,000 fill in the blank 292facfcbfc4faf_9 fill in the blank 292facfcbfc4faf_10% Total operating expenses $278,500 $225,000 $fill in the blank 292facfcbfc4faf_11 fill in the blank 292facfcbfc4faf_12% Income before income tax expense 41,500 25,000 fill in the blank 292facfcbfc4faf_13 fill in the blank 292facfcbfc4faf_14% Income tax expense 16,600 10,000 fill in the blank 292facfcbfc4faf_15 fill in the blank 292facfcbfc4faf_16% Net income $24,900 $15,000 $fill in the blank 292facfcbfc4faf_17 fill in the blank 292facfcbfc4faf_18% b. The net income for Winthrop Company increased between years. This increase was the combined result of an in sales and percentage in cost of merchandise sold. The cost of merchandise sold increased at a rate than the increase in sales, thus causing the percentage increase in gross profit to be than the percentage increase in sales.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Income statement data for Winthrop Company for two recent years ended December 31 are as follows:

	Current Year	Previous Year
Sales	$2,280,000		$2,000,000
Cost of merchandise sold	1,960,000		1,750,000
Gross profit	$320,000		$250,000
Selling expenses	$156,500		$125,000
Administrative expenses	122,000		100,000
Total operating expenses	$278,500		$225,000
Income before income tax expense	$41,500		$25,000
Income tax expenses	16,600		10,000
Net income	$24,900		$15,000

a. Prepare a comparative income statement with horizontal analysis, indicating the increase (decrease) for the current year when compared with the previous year. If required, round to one decimal place.

Winthrop CompanyComparative Income StatementFor the Years Ended December 31

	Current year Amount	Previous year Amount	Increase (Decrease) Amount	Increase (Decrease) Percent
Sales	$2,280,000	$2,000,000	$fill in the blank 292facfcbfc4faf_1	fill in the blank 292facfcbfc4faf_2%
Cost of merchandise sold	1,960,000	1,750,000	fill in the blank 292facfcbfc4faf_3	fill in the blank 292facfcbfc4faf_4%
Gross profit	$320,000	$250,000	$fill in the blank 292facfcbfc4faf_5	fill in the blank 292facfcbfc4faf_6%
Selling expenses	$156,500	$125,000	$fill in the blank 292facfcbfc4faf_7	fill in the blank 292facfcbfc4faf_8%
Administrative expenses	122,000	100,000	fill in the blank 292facfcbfc4faf_9	fill in the blank 292facfcbfc4faf_10%
Total operating expenses	$278,500	$225,000	$fill in the blank 292facfcbfc4faf_11	fill in the blank 292facfcbfc4faf_12%
Income before income tax expense	41,500	25,000	fill in the blank 292facfcbfc4faf_13	fill in the blank 292facfcbfc4faf_14%
Income tax expense	16,600	10,000	fill in the blank 292facfcbfc4faf_15	fill in the blank 292facfcbfc4faf_16%
Net income	$24,900	$15,000	$fill in the blank 292facfcbfc4faf_17	fill in the blank 292facfcbfc4faf_18%

b. The net income for Winthrop Company increased between years. This increase was the combined result of an

in sales and

percentage

in cost of merchandise sold. The cost of merchandise sold increased at a

rate than the increase in sales, thus causing the percentage increase in gross profit to be

than the percentage increase in sales.

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